The Subscription Economy

Remember when buying software meant paying once and owning it forever? Or when a gym membership was the only subscription most people had? Those days are gone. We’ve entered the subscription economy, where everything from razor blades to luxury cars can be had for a monthly fee. And it’s reshaping how businesses make money.

What’s Actually Happening

The business world is experiencing a massive shift from one-time purchases to recurring revenue models. Netflix killed video rentals. Spotify replaced CD collections. Software-as-a-Service (SaaS) made traditional licenses obsolete. Now, this model is invading every industry:

• Cars (BMW subscription for heated seats)
• Fashion (clothing boxes like Stitch Fix)
• Food (meal kit services)
• Home goods (everything from toilet paper to furniture)
• Professional services (legal, accounting, marketing)

This isn’t just a trend – it’s a fundamental restructuring of how businesses create and capture value.

Why Businesses Are Going All-In

The shift to subscriptions isn’t happening because businesses want to annoy customers. It’s happening because the economics are incredibly compelling:

• Predictable revenue – Knowing exactly how much money is coming in next month
• Higher customer lifetime value – A R299/month customer is worth more than a one-time R3700 purchase
• Deeper customer relationships – Ongoing service means ongoing opportunities to add value
• Lower customer acquisition costs – You don’t have to resell to the same customer repeatedly
• Better business valuations – Investors pay premium multiples for recurring revenue

For many businesses, subscriptions have literally been the difference between thriving and closing shop.

What This Means for Your Customer Relationships

Subscriptions fundamentally change how you relate to customers:

• You no longer “close the sale” and move on
• Value delivery becomes ongoing, not a one-time event
• Customer success becomes critical to your financial success
• Retention metrics become as important as acquisition metrics

The transactional business thinks about the next sale. The subscription business thinks about the next year of value delivery.

The Bottom Line

The subscription economy isn’t just another business trend – it’s a fundamental shift in how value is delivered and captured. Companies clinging to purely transactional models will find themselves increasingly vulnerable to subscription-based competitors.

The question isn’t whether your industry will be affected – it’s how quickly and how dramatically.

Remember: Netflix didn’t kill Blockbuster. Recurring revenue did.

Your business can either lead this shift or be disrupted by someone who does. The choice is yours – just don’t mistake it for a choice that can be indefinitely postponed.

Till next time,
Mpho🫡